18 Month Eligibility

[MBCarey]

We have a plan that is debating about going to either a 401(k) Safe Harbor Plan or a New Comparability Plan. The eligibility for the current profit haring plan is entry on Jan. 1 after 18 months of service. Can we maintain this eligibility or do we have to reduce to 1 year of service for either Safe Harbor or New Comp.

[Tom Poje]

Hopefully everyone is 100% vested! I know they always say a plan can impose a 2 year wait if everyone is 100% vested, but it actually pertains that require more than a 1 year wait, not just a 2 year wait.

anyway, a safe harbor can not impose more than a 1 year wait because the 401k can not impose more than a 1 year wait.

new comparability or cross tested plans are still profit sharing plans and as such could have the eligibility you have described. you can also have a 401k feature (just not safe harbor) that has eligibility = to the 1 year max wait